Health, Sanitation And Education Become The Key Areas Of CSR Implementation
CSR has become one of key factors of business process and decision making for companies in India after the implementation of Companies Act 2013. This act applies to the Section 134 of the Act also. As per this Act, all companies having a net worth of INR 500 crore or above, or a turnover of INR 1,000 crore or more, or a net profit of INR 5 crore or higher in a given financial year is liable to constitute a CSR committee within its system and is bound to spend 2 percent of their net profit towards CSR activities. There have been radical developments in this regard from that time onwards. Companies have been actively involved in implementing organized CSR programmes within communities to build up a strong relationship, social brand image and tap in to the local markets for long term benefits and growth.
Amidst the popularity of CSR activity performance, there are some areas which were more popular than others. The top priority areas for CSR programmes included health, sanitation and education. It has been observed that more that 50 percent of the CSR funds went in to these segments. The prime factor which has worked towards this inclination is due to the fact that the companies were already associated with the CSR activities in these areas even before the law came in to place. There are certain other factors which have also contributed towards CSR investments in these segments.
- The vital reason behind the CSR activity implementation is building strong relationships with local communities. This helps in creating a prominent social brand image and brings in the support from the local people. Investment of CSR funds in these areas has benefitted the communities on a large scale which has been proved helpful for operational and managerial functions of a company.
- The second most important factor is the local low cost labor availability
- Community services bring out the identity of a company. When organizations invest in education of the youth and health related benefits, they tend to join the company due to trust build up. Local labor also attracts other people from the neighborhood creating a steady workforce supply for the company.
- Lastly, partnership deals can be attracted due to the local workforce. As investors seek for a company profile, they are more convinced of the growth and delivery parameters of the company due its local labor density and brand value within the community.
The next key areas of CSR fund investments went in to rural development, women empowerment and certain other specific activities. The slum development, hiring of war veterans and activities relating to the old people received the minimum percentage of funds as well as projects. This might be due to the low people density in these segments. The companies might be skeptical in such areas as these might not contribute towards building brand image in comparison to health, sanitation and education. Looking at the 2015 trends, it can be safely assumed that in coming years CSR activity implementation will centre around these three areas only.
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